TCO and the sums of the preacher men

Vendors evangelise about the total cost of ownership issue as a means to push their own products.

There are 300 million PCs on planet Earth today, compared with ameans to push their own products. worldwide population of five billion people, so the ratio is not too good if you are an IT vendor. But if you believe research firm Gartner Group's total cost of ownership (TCO) figures, a PC actually costs $30,000 over its effective life - nine billion billion dollars for the worldwide PC installed base.

That would bankrupt most developed countries. Even if you admit that some of those 300 million PCs have already been amortised, several of the most developed countries in the world would still be dwarfed by a more conservative estimate.

But as PC maker Fujitsu pointed out, the figures are meaningless to real businesses. Charles Bows, marketing manager of Fujitsu, said: 'All research organisations say the initial purchase accounts for 14 per cent of the total cost, so it's in every company's interest to look at TCO. But there's a lot of rubbish being talked about this, so it is worth looking at all the elements involved and at your company's strategy.'

Many of the figures bandied about only confuse users and distract them from the real solutions.

Two weeks ago, the Gartner Group produced yet another presentation on TCO at its conference in Orlando, Florida. The company's latest figures do not differ dramatically from those that over the past year prompted every IT vendor to issue a flood of hype - mainly about 'low TCO' approaches - which of course require the purchase of brand new kit.

But the opening slides in Gartner's presentation marked a significant shift from its previous position - with analysts saying the costs of companies moving from 'highly mature legacy systems' to 'immature emerging systems' are poorly understood.

Best case savings now, said Gartner, can range from 20 to 30 per cent of the total costs. A so-called typical 2,500-PC installation in a distributed environment could save $4.5 million this year and $16 million in 2001 with greater efficiency of buying and maintenance.

The factors IT buyers will have to think about include efficient PC and networking deployment strategies, improved co-ordination for user support, increased standardisation of computing platforms and implementation of automated asset and systems management tools. Gartner now recommends best of breed electronic software distribution tools and system management tools.

Enter Microsoft. It has claimed it can consistently offer system management tools and all the other solutions Gartner proffers.

Jeremy Gittins, Windows marketing manager at Microsoft UK, said: 'Some people believe that if you change the desktop you will reduce the total cost of ownership. This is a zero sum. If you move it off the desktop, you've got to put it somewhere. We're looking at thousands of customers worldwide and trying to understand the bigger picture.'

While Fujitsu, Tulip, Compaq and now Dell have launched their Net PCs largely on the basis of the TCO argument, Microsoft's contribution is to supply the Zero Administration for Windows (Zaw) tools, which are essential to realise the PC suppliers' TCO arguments.

But Gittins admitted that a full implementation of Zaw will not arrive until Windows NT 5 - most vendors report that this is now delayed until 1999. 'We've launched Zaw to automate and deploy applications. Our vision is no-touch client/server systems,' said Gittins.

Zaw's now patented Intellimirror technology, he said, will allow it to transfer bits from the client - whether it's a Net PC or an ordinary PC - to the server so people can rove from location to location and still have their preferred settings. MS' licensing policy will carry on, regardless.

'I don't think our licensing will be any different, but the third element of Zaw is that it will give control. We don't care how thick or thin our clients are or whether they're a Net PC, a PC or a Windows terminal,' said Gittins.

That will open the way for Java, provided, of course, that Microsoft can settle its differences with Sun Microsystems. It's well known that Citrix, whose technology Compaq licensed last week, is designing Java versions of its Winframe software and that Microsoft was forced to license its Hydra multiuser technology earlier this year. That will let vendors off the Intel-Microsoft Net PC hook too.

Gartner is still being ambivalent about whether network computers or PCs will win the game. In its presentation the firm said that in some situations NCs can save money. The potential savings for a W95 desktop ranges from 26 per cent for a Net PC to 30 or 40 per cent for an NC. The hardware for either will fall in the same ball park, but software is a different matter.

On 3 November, IBM-Lotus will release Kona, its Smartsuite Java application components for the NC platform. That could change all Gartner's predictions and plunge users into even more uncertainty and hype.

What is certain is that the whole situation is in flux, TCO figures have been greatly inflated and used for marketing ends, and there is more than one solution to bringing down costs. Any firm worth its salt will investigate its future IT based on its own ideas, research and requirements, rather than swallowing the claims of the vendors or going religiously for a single platform.